John Key, the former prime minister of New Zealand, is being sued by the shareholders of Palo Alto Networks (PAN) for alleged insider trading, along with other members of the well-known cybersecurity vendor's management team and board of directors. Key is a PAN director.
Others facing insider trading allegations include PAN founder Nir Zuk, the company's chief executive Nikesh Arora, and board director and Zoom chief operating officer Aparna Bawa.
Key says there's no merit to any of the claims.
Collectively, the company officials are alleged to have breached their "fiduciary duties as directors and/or officers of Palo Alto" and are accused of "unjust enrichment, abuse of control, gross mismanagement, [and] waste of corporate assets" and for having breached the US Securities Exchange Act.
The alleged wrongdoing is said to have taken place between August 18, 2023 and February 20 this year. Lawyers for the shareholders are asking for a jury trial to be held, and are seeking restitution from the defendants in the case, along with costs and expert fees.
PAN shareholders allege the company officials made false and misleading statements about PAN's products, such as the Cortex XSIAM artificial intelligence security automation platform being adopted by customers. The court filing refers to a earnings call on February 20 this year, during which Arora revealed that several US federal government deals didn't close and the company lowered its guidance for the third quarter of the 2024 financial year.
As a result of the news, the PAN share price dropped by almost 28% the following day.
'Unproven allegations'
Key has been a director of PAN since 2019, and also chairs the company's audit committee. Key says along with the other PAN directors, he has been named in a series of copycat lawsuits brought by three shareholders "based on unproven allegations" against the company in relation to its second quarter earnings update.
"Such lawsuits are not uncommon in the United States hence why this action has received very little media coverage offshore. In my view there is no merit to any of the claims," Key says.
"Palo Alto Networks has very strict share trading policies for its senior management and directors inline with Securities and Exchange Commission guidelines. At all times I have followed these rules."
Key sold 2297 PAN shares on December 18, 2023 US time, for US$709,175 according to the court application. Chief executive Arora sold shares for over US$159 million, and founder Zuk earnt almost US$33.2 million for selling 108,000 shares in PAN.
Other company officials also sold large amounts of PAN shares. The total amount of alleged insider trading is said to exceed US$265 million.
For the second quarter of its 2024 financial year, PAN reported a revenue increase of 19% to US$1.975 billion. The company makes information security hardware and software such as firewalls, and supplies threat intelligence for its customers. In April this year, PAN disclosed a serious vulnerability in its firewall operating system software, rated as 10 out of 10 in severity, which would allow remote code execution.
In 2023, Key received US$380,355 in total compensation from PAN, all of it in shares in the company. He stepped down from the position as chairman of ANZ NZ in March this year.
31 Comments
its schactually not true
https://www.brainyquote.com/quotes/john_key_490308
You are not going to change me and if you do, it will look like a fraud, it will be a fraud.
For those interested, the following is a link to all the filings from the SEC.
It was only a matter of time the guy is not trustworthy.
Just look at all the laundered money he let into this country and continually told New Zealanders that the laundered money was only 3 % of the property market.
A big part of why this country is in the mess we are in sits with John Key Starting from the GFC.
Glad to see the tail end of him and I was a big fan of him at one time until I worked him out.
Once a banker always a banker.
Ah yes the good old special via category for China Southern Airline fliers which bypassed any health and character checks and allowed suitcases of laundered cash to flow in to the Auckland property market as kiwis watched in silence.
The interesting fact is that money is still in the Auckland property market, and when it is repatriated it will make the Chinese sell off of USD Bonds look like a petty cash reimbursement in relative terms.
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